This decline follows the banking giant’s record-breaking annual pre-tax profit of £7.5bn in 2023.

The drop in profits was attributed to higher business costs, including a new Bank of England levy affecting the entire sector, as well as a decrease in net interest income. Net interest income, which is the difference between what the bank earns from loans and pays out for deposits, experienced a downturn.

Despite the decrease in profits, Lloyds stated that the results were in line with expectations, with analysts forecasting profits of £1.7bn for the quarter. Shares in the company fell by 2% following the publication of the figures.

CEO Charlie Nunn remains optimistic about the bank’s performance. He said: “The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality.

“Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance.”

Lloyds also adjusted its forecasts for the year, now anticipating a 1.5% increase in UK house prices, contrary to its previous prediction of a decline. This adjustment aligns with the improving economic outlook in the UK.

Earlier this year, Lloyds announced plans to cut approximately 1,600 jobs across its branch network as it transitions towards online banking. The group also revealed intentions to eliminate its fleet of mobile banking vans as part of this shift in business strategy.